Hunt’s opening remarks made it clear that his plan centres around three priorities; stability, growth and public services. He also said that whilst “difficult decisions” have been taken, the plan provides “fair solutions” to repair the shortfall in public finances and tackle inflation.
To help you understand the changes a little better, we’ve pulled together our DJH Mitten Clarke Autumn Statement Report which looks at the new Chancellor’s announcements in detail but here are some of the key highlights…
A balanced plan
The Autumn Statement takes a balanced approach towards consolidating the hole in the Nation’s finances, with £55bn found between revenue raising and spending restraint, whilst protecting vital public services like health and education.
As well as the fallout from the pandemic, the Office for Budget Responsibility (OBR) has stated that global factors are the cause of current inflation. With Hunt commenting that “high inflation is the enemy of stability”, and stability being one of his three key priorities, “responsible decisions” have been made to achieve fiscal sustainability and provide the conditions for economic growth.
So, what key announcements were made?
- The additional rate of income tax threshold will be reduced from £150,000 to £125,140 from 6 April 2023, meaning thousands more workers will move into the highest tax band.
- Income tax and National Insurance contribution thresholds have been fixed for a further two years, until April 2028.
- The tax free allowance on dividends has been cut, decreasing to £1,000 next year, and £500 the following year.
- The capital gains tax free allowance has also been cut, reducing from £12,300 to £6,000 next year and again the following year to £3,000.
- In changes to road tax, from April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty (road tax).
- The windfall tax targeting energy company profits is being extended and increased, with the Energy Profits Levy rising from 25% to 35% from January 2023 until March 2028.
- R&D tax relief for SMEs has seen the additional deduction rate cut to 86% and the credit rate to 10%, however the rate of the separate R&D Expenditure Credit has increased from 13% to 20%.
- To support and prioritise vital public services, like health and education, spending will continue to increase in real-terms every year for the next 5 years, but at a slower rate.
- Schools will see a £2.3bn increase in budgets next year, and the same increase again in 2024-25.
- Error and fraud in the Benefits system will be tackled, saving £410m over the next 2 years, and £2.2bn per year by 2027-78.
- Next year, the NHS will see a budget increase of £3.3bn and adult social care will see an increase of £2.8bn.
- Capital investment of £600bn over the next 5 years with public investment in infrastructure, including roads and train lines go ahead, with projects like HS2, Northern Powerhouse Rail, Sizewell nuclear powerplant and new hospitals all continuing.
Cost of living support
- The National Living Wage will increase next year, making the new hourly rate £10.42.
- The energy bills cap will continue for a further 12 months, but will rise from £2,500 to £3,000 – however, it is expected to still provide households an average extra £500 of support.
- Extra energy bills support will be provided to the most vulnerable, with households on means-tested benefits receiving £900, pensioners receiving £300 and those on disability benefit receiving £150.
Take a look at our Autumn Statement report
There was a lot to digest, so we’ve put together our Autumn Statement 2022 Report, with details of the current economic background, all the measures announced by The Chancellor and what they could mean for you.